My Thoughts on the CFA Programme

CFA

The CFA (Chartered Financial Analyst) curriculum consists of three exams which test candidates on various topics relating to portfolio management, economics and accounting. Exams are offered twice a year for Level 1 (June and December) and once a year for Levels 2 and 3. Each exam has a morning and an afternoon session which summed together results in a gruelling 6 hour exam experience. I am sure that there are various reasons why people decide to pursue this designation but having spoken to numerous candidates, I believe that they can be summarised in the below bullet points:

  • Higher Salary: I have seen a lot of online debate around this topic and my opinion is that although having the designation does not automatically guarantee a highly paid job, the CFA charter does come as a preferred qualification under numerous job descriptions (you can look at investment management jobs on eFinancialCareers for example) and it will help you get jobs that are likely to pay a higher salary range.
  • Company Promotes It: I have met a lot of candidates who work for institutions where CFA is part of their company’s learning and development policy. In addition to paying for exam fees, I heard that these companies will offer employees cash incentives for passing exams.
  • Increase Employability: this point has lot of overlap with the “Higher Salary” argument. For jobs where CFA knowledge is relevant, having the charter or at least showing on your CV that you are a CFA candidate is likely to increase your chances of an interview. I also think a lot of recruiters use CFA as a keyword when they filter CVs.
  • Entry into the Buyside: the curriculum is heavily focused on investment management and I have seen a lot of people justify their study hours thinking the qualification would allow them to get a job at a fund; for some it paid off and for others it didn’t.
  • My Friends are doing it: if you are already working in the financial sector and if every year around May, all you hear about is the CFA exam I can see how you can get inevitably influenced. Especially at big companies where grads get together to form study groups I saw cases where the CFA programme created some form of sub-community.
  • Learning: I am sure that there are people out there who just embark on this journey for the educational value that they place on the curriculum.

So, how hard are the CFA Exams you may ask. This is exactly what I googled prior to registering for the exam and I kept coming across warnings about the difficulty of the exams; the pass rates which are published by CFA Institute can be seen below:

Year Level 1 Level 2 Level 3
2018 Pass % 43%/45% 45% 56%
2017 Pass % 43%/43% 47% 54%
2016 Pass % 43%/43% 46% 54%
2015 Pass % 42%/43% 46% 53%
2014 Pass % 42%/44% 46% 54%
2013 Pass % 38%/43% 43% 49%
2012 Pass % 38%/37% 42% 52%

Although at first they might not seem extremely low pass rates, we must keep in mind the average study hours that each candidate put in. The preparation time might vary based on the candidate’s background but some online sources that I came across suggested that the average candidate puts in 6 months prep time or 200-300 hours. That is a lot of time for not having the certainty of passing. A lot of people end up giving up because of the time the exam takes away from their personal lives and frankly I don’t blame them. The average charterholder fails 2 exams before reaching his/her goal so prior to embarking on the program I think you really need to ask yourself if you are willing to invest 2-4 years of your life in studying the contents of the curriculum.

My Thoughts

For me, taking the CFA exams was definitely the right choice. Compared to when I started studying for the exam I believe that I have gained a good foundation in finance and portfolio management. Some of the key benefits that I would like to mention are:

  • Personal Investing: I regularly apply the concepts that I picked up from the curriculum for my personal investments and thanks to what I learned I am more conscious about retirement planning and my management of my own personal wealth. Whether I am stock picking or allocating my wealth I have learned to look at things in a methodical manner whilst being conscious of any behavioural biases that I made have as an investor.
  • Broad Financial Knowledge: it would have been impossible for the CFA programme to give detailed technical knowledge of ALL areas  in Finance but it has done a great job in depicting the big picture. The programme has a bit of everything for everyone and I think the CFA coupled with some specialised technical knowledge is the key  to a successful career.
  • It Taught Me Discipline: having brutally failed the level 2 exam after putting in hundreds of hours, the exam forced me to  step back and to assess what was not working for me, it helped me remove bad habits and to implement effective study techniques.

I hope you enjoyed this post. In future posts I will go into more detail regarding each level, I intend to present some exam strategies that worked for me. I appreciate your feedback so please feel free to leave comments.

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